Mankind Pharma makes stellar debut; lists at 20% premium

Shares of Mankind Pharma, a homegrown company that sells condom brand Manforce and pregnancy test kit Prega News, made a positive stock market debut on Tuesday with the stock listing at ₹1,300 on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), a 20.4% premium to its issue price of ₹1,080 per share. In comparison, the BSE Sensex was trading 190 points, or 0.31%, higher at 61,954 levels.

Post listing, the stock touched a high of ₹1,325 on the BSE, while the market capitalisation stood at ₹53,569 crore at the time of reporting. On the volume front, as many as 1.37 crore shares changed hands over the counter on the BSE and the NSE.

The strong listing of Mankind Pharma shares was in line with Street expectations as the stock was commanding a premium of ₹120 per equity share in the grey market, a parallel market where deals are done in-person only among the trusted group of investors. This means, Mankind Pharma IPO listing price was pegged at around ₹1,200 (₹1,080 + ₹120), which is around 11% higher from the IPO price of ₹1,080 per share.

The Delhi-based company raised ₹4,326 crore in the country’s biggest initial public offering (IPO) so far this year, which received an overwhelming response from qualified institutional investors (QIBs) and non-institutional investors (NIIs), but failed to excite retail investors.

The three-day IPO of Mankind Pharma, which opened for subscription between April 25-27, was subscribed 15.32 times, with the portion reserved for QIBs and NIIs receiving bids nearly 49.16 times and 3.8% times, respectively. However, the IPO received tepid response from retail investors as the quota reserved for them was booked 0.92 times.

The lot size of the offer was 13 shares, which means the minimum application amount for a retail investor was ₹14,040 (₹1,080 x 13).  

The IPO of the country’s fourth largest pharma company was completely an offer for sale (OFS), which means the entire proceeds from the issue would be paid to the selling shareholders in proportion to the equity shares offered by them and the company would not receive any proceeds from the scheme.

Most analysts had assigned “SUBSCRIBE” rating to Mankind Pharma IPO, citing opportunities from its newer acquired products and its plan to backward integrate in its power brands. The firm’s growing presence in areas of chronic therapy, and high brand recognition as well as good track record of operational & financial performance also augur well for the company.

Ahead of the IPO, the homegrown pharma company raised ₹1,297.90 crore by allotting 1,20,17,652 equity shares at ₹1,080 per share to 77 anchor investors (including 16 domestic mutual funds through a total of 41 schemes). The anchor investors include Canada Pension Plan Investment Board, Government of Singapore, Monetary Authority of Singapore, Goldman Sachs, Fidelity, Blackrock, Abu Dhabi Investment, Nomura, Morgan Stanley, HDFC Trustee, SBI MF, ICICI Prudential, FIAM Group Trust, National Pension Service by Blackrock, Government Pension Fund, Ashoka India, Motilal Oswal, Nippon Life India Trustee, Axis MF, Kotak MF, and others.

Established in 1991, Mankind Pharma, the country’s fourth largest pharmaceutical company in terms of domestic sales for the financial year 2022, generates 98% of its revenue from India. The company, which manufactures emergency contraceptive brand Unwanted-72, Gas-O-Fast ayurvedic antacids, and acne-treating medicine AcneStar, is a net debt-free company which generated profit after tax (PAT) of ₹1,030.5 crore in 2019-20, ₹1,253.9 crore in 2020-21, and ₹1,419.2 crore in 2021-22. For the nine-month ended December 31, 2022, the company’s PAT stood at ₹986.9 crore. For the financial years 2020, 2021 and 2022, the company's revenue from operations in India amounted to ₹5,788.8 crore, ₹6,028 crore and ₹7,594.7 crore, respectively, representing 98.70%, 97.01% and 97.60%, respectively, of its total revenue from operations. After India, its major markets are the U.S., Bangladesh, Sri Lanka and Nepal. 

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